New Delhi, Apr 14 (KNN) Despite a sharp rise in global energy prices amid the ongoing West Asia conflict, the impact on India’s retail inflation has remained limited so far, according to a report by CRISIL Intelligence.
The report noted that even after a month since the onset of the conflict, the pass-through of elevated global fuel prices to domestic inflation has been muted.
Global Energy Prices Surge Sharply
Internationally, Brent crude prices rose by around 45 percent in March, while natural gas prices surged nearly 69 percent compared with February, reported ANI.
However, India’s Consumer Price Index (CPI)-based inflation increased only marginally to 3.4 percent in March from 3.2 percent in February, primarily driven by food and fuel components.
According to the report, government interventions played a key role in cushioning the impact on consumers. Retail prices of petrol and diesel remained largely unchanged, while excise duty cuts announced in late March helped shield households from global price volatility.
Core Inflation Remains Stable
Core inflation remained stable at 3.7 percent, indicating that second-round effects of higher energy costs have not yet materialised. Additionally, lower inflation in gold and silver, supported by a correction in global prices and a high base, contributed to containing overall inflation.
Looking ahead, CRISIL Intelligence has projected average inflation at 4.5 percent for FY27, with a potential rise to 4.7 percent if elevated energy prices persist due to prolonged geopolitical tensions.
Risks from Sustained Fuel Price Rise
The report cautioned that sustained increases in global fuel prices could eventually translate into higher domestic prices for cooking and transport fuels, along with broader cost pressures through logistics and trade channels.
Weather-related risks also remain a concern. The India Meteorological Department has projected a below-normal southwest monsoon at 92 percent of the long-period average for 2026, with likely El Niño conditions, raising the risk of food inflation if agricultural output is affected.
Mixed Trends in Food Inflation
On the food front, inflation trends remained mixed. While cereals and pulses continued to witness deflation, albeit at a slower pace, prices of vegetables, meat, fish, edible oils, and ready-made food items saw an uptick.
Fuel inflation was supported by higher prices of LPG and piped natural gas, although electricity prices remained in deflation. Core segments such as housing, clothing, and education remained broadly stable, while transport inflation showed limited impact from global fuel shocks, despite a rise in airfares.
The report highlighted that prolonged geopolitical tensions and adverse weather conditions remain key upside risks to inflation going forward.
(KNN Bureau)
